Berenberg raises target price on LBG Media

Berenberg said LBG was "uniquely positioned" to enable brands to target the hard-to-reach young adult audience, with viewers growing by 23% in FY23 to 452.0m as it delivered a total of 128.0bn views in the year.

The German bank noted that LBG's revenue was split 43:57 between direct and indirect revenue. On the direct side of the business, LBG works with blue-chip brands, such as Visa, Nike, Disney and Diageo. Repeat client revenue in its direct unit was 75% of the total in FY23.

"This reflects the value that these and the other brands that LBG works with see in its offering, underpinned by the reach it provides into this valuable audience. We forecast 10% underlying direct revenue growth in FY24E," said Berenberg, which has a 'buy' rating on the stock.

"Management has outlined an ambition to reach £200.0m of revenue, which it has a 'clear line of sight' to. There is no timeline for delivery, but it did comment that it will achieve this target through a combination of organic and inorganic growth. While the lack of a timeline is unhelpful, we think this is a positive sign in terms of outlining management's ambition and where it thinks the business can get to in the medium term."

Berenberg added that LBG's shares had risen by roughly 50% since its FY23 results on 18 April and were now trading on a 15.7x CY24E price-to-earnings ratio.

Reporting by Iain Gilbert at Sharecast.com